SHARES closed lower on Wednesday after the central bank’s chief said they may consider a rate hike in June and amid fears of global growth risks as coronavirus disease 2019 (COVID-19) cases in China continue to rise.

The bellwether Philippine Stock Exchange index (PSEi) dropped 116.11 points or 1.66% to end at 6,863.91 on Wednesday, while the broader all shares index fell 52.06 points or 1.40% to close at 3,660.33. 

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said via Viber message that the local bourse declined as investors reacted to statements from Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno on a possible rate increase in June.

“Wednesday’s decline (can be) attributed to investors’ reaction over the earlier rate hike signals from the BSP,” Mr. Tantiangco said. 

Mr. Diokno said in an interview with Bloomberg Television that the central bank may consider raising benchmark interest rates at its June 23 meeting.

Policy makers may wait for another cycle after the May 19 meeting if the economy grew around 6%-7% in the first quarter, he said.

The BSP chief previously said the central bank may begin rate hikes in the second half of this year, and that an increase to 2.5%-2.75% as part of a normalization process is “reasonable.”

Meanwhile, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the local bourse ended in negative territory amid surging COVID-19 cases in China, the world’s second largest economy, which could lead to a global slowdown.

Millions of people in Beijing took their second COVID-19 tests of the week on Wednesday as the Chinese capital tried to keep an outbreak numbering in the dozens from spiralling into a crisis like the one the locked-down city of Shanghai is enduring, Reuters reported.

Data showed six of Shanghai’s 16 districts had zero cases outside quarantined areas, with numbers in seven others in the single-digits. In total, Shanghai detected 171 such cases on Tuesday, down from Monday’s 217.

“Moody’s Analytics trimmed its Philippines gross domestic product forecast this year to 6.1% (vs. 6.4% March projection) due to the impact of slower global demand and faster inflation on the economy,” Mr. Limlingan added.

All sectoral indices closed lower on Wednesday. Mining and oil lost 451.30 points or 3.77% to end at 11,490.43; property decreased 70.16 points or 2.16% to 3,170.86; holding firms went down 138.88 points or 2.12% to 6,408.31; financials declined 22.10 points or 1.34% to 1,627.12; services dropped 25.25 points or 1.30% to 1,916.52; and industrials retreated 69.08 points or 0.73% to 9,343.47.

Decliners bested advancers, 138 against 49, while 43 names ended unchanged.

Value turnover went up to P8.78 billion on Wednesday with 816.50 million shares changing hands, higher than the P4.11 billion with 549.51 million issues logged the previous day.

Net foreign buying reached P1.67 billion on Wednesday, a turnaround from the P312.19 million in net selling posted on Tuesday. — Revin Mikhael D. Ochave with Reuters